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Andy Jordan Educator for Futures Trading Strategies on Spreads, Options, Swing/Day Trading, and Editor of Traders Notebook. You can read my bio by following this link.

Feeling Neutral

Some traders unconsciously ratchet their emotions up a notch each time they avoid a trade when the market is not in their favor. So their emotions build, like steam pressure, to higher and higher levels. You can see the anger growing in them. They feel that by patiently staying out of every trade that they are demonstrating superior trading skills, but they are not being rewarded for it. When we i...
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Is trading a clean way to earn money?

Many wannabe traders have trouble following their trading plans when they are seemingly in conflict with their basic beliefs. While you may have intended to stay with a strategy having specific parameters for entering and exiting a trade, there are things that can cause you to abandon your plan when you are faced with the reality of a live market. Sometimes this happens because you question whethe...
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Confidence

A few years ago I had an interesting conversation with Joe about “what makes a trader a successful trader”. We discussed this over several days because we wanted to find out how we can help struggling traders to enhance their trading. We finally came to the conclusion that “confidence” is what makes a huge difference. A trader can have a good system, good money and risk management in place, good u...
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Paying back borrowed money to the market

Have you ever changed a losing trade into a winning trade by ignoring your trading rules? I would guess almost every trader has done it at least once, and many do it regularly. The problem is, even if you made money on this single trade, the market will almost surely make you pay back your gains with high interest. Let me giving you an example.   Let’s assume you went long the Soybeans. Based...
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How to trade the mini/micro contracts!

I've received the following email from one of our Traders Notebook subscriber regarding the new Outright Futures trading ideas. I think it is VERY informative! Thank you Tom!!! "This new program sounds very interesting.  Here are a few thoughts about trading with the mini/micro contracts.  I would advise everyone to put up a chart of the full size contract side by side with one of the mi...
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Go to the Exchanges for the best basic Information

The exchanges all have some very basic information freely available. This even includes some trading strategies. There may be a small amount of hype in what they say, but generally, the information is good. The problem with information you get outside of the exchanges is all too often filled with false claims, slanted to whatever the person is selling. Traders are continually bombarded in magazine...
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Trading is not scientific

I say that because trading is not an exact science. You can't do X and get Y every time. Trading does not fit the definition of science. It is not totally objective. It is as much an art as it is anything else. There is no magic formula. Trading is all about probability. It is the art of correctly applying a set of carefully thought out rules and allocating the probability of that event to result ...
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Why so many traders "don’t make it".

Recent figures show that 90% of traders who ever trade lose their account and that 10% actually go bankrupt. Those are scary numbers, I’m sure you’d agree. Traders are not stupid people; most traders have an above average IQ and are above average in most categories such as education and income. I think they don’t make a success out of trading because t hey lack proper education and mentoring. By e...
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Over-Trading

Over-trading fits in under the topic of risk management. We are talking “risk control.” First, I would say that risk management is one of the most important things that you really need to understand. Second, you must begin to under-trade, under-trade, under-trade. Whatever you think your position ought to be, cut it at least in half. My experience with novice traders is that they trade 3 to 5 time...
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Learning from losses

Winners learn more from losses than from profits. When a profit is taken, there may be little room for improvement. When a loss is taken, a trader's self-discipline is the first thing to be examined. The second aspect of a loss is how did the actual price action cause the loss? Was there a trend reversal; an unexpected gap? Most beginning traders sustain losses due to emotional reactions. Traders ...
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Ego-less Trading

The majority of traders might think it would be impossible to trade in an "ego-less state", but this is not the case. To trade in an ego-less state means simply to not let the ego and emotions get involved. While trading in an ego-less state, winning or losing on a single trade become almost meaningless when the focus lies only on the whole picture. This is the soul of ego-less trading. Trading wi...
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The Best Trader in the World

If you had to describe the best trader in the world, who would that person be? What qualities would he have? Take a moment to envision him. This is important, because this is the person you want to be, so you need to have an exact picture of him and what his qualities are. The answer is that he is someone whose trading is somehow “complete”. Someone who is controlling his trading at all times; som...
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Controlling Emotions

Winning traders cannot afford to be influenced by their emotions. The nature of trading demands an objective, logical approach. If you experience extreme excitement after a win and extreme disappointment after a loss, you will be living on an emotional roller coaster: up and down, up and down. Many beginning traders have head knowledge of what it means to control their emotions. They can imagine a...
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Fear of missing “the big one”

The best way to handle that kind of fear is walk away from the situation. Get up, and walk away from the computer and any news you may be watching. Remove yourself from whatever it is that triggered the fear. Do anything that will take you out of the fear/panic mode. Don’t sit down to trade again, and don’t return to the markets until you have managed to achieve some emotional control over your fe...
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Becoming a Perfect Trader

As traders we have a strong need to want complete control over the outcome of a trade. We want to believe that if we analyze the markets long enough, we'll have perfect knowledge and we can trade to perfection. But such desire leads to wrong assumptions that can do us more harm than good. Assuming we must have control restricts our actions and reactions, and the result can be unnecessary stress. W...
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Recent comment in this post
Jean1975
In trading you can only control yourself and the risk amount which you a willing to take. Outcome cannot be controlled. Better to ... Read More
Thursday, 26 May 2016 07:53
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Walk-Forward Testing

Walk-forward testing is the first real step in testing any system on live data. A trader should be somewhat confident that the system or method can produce results in line with the hypothetical results received from back testing. At this stage of testing, it’s important to watch a trading system or method run over live data for a period of weeks or months until a large, statistically valid univers...
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After closing out a trade

Once you have closed your position, you should record everything about the trade. Write down where you wanted to enter the trade, what you expected out of the trade, and what you actually did get out of the trade. Make sure to include notes that will help you learn from the trade, reasoning what actually took place once you entered the trade. Explain why the trade was a winner or a loser. If you k...
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Thoughts about being an option buyer

An option buyer has the odds strongly stacked against him. What most option buyers don't realize is that in order for them to make money, they must be right in three areas: He has to be right about market direction He has to be right about the degree of market direction He has to know when the market move will move in a certain direction That is definitely worse than being a trader in the underlyi...
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Multi-Leg Spreads

Not many traders are familiar with futures spread trading. Even fewer traders understand multi-leg spreads. However, trading these types of spreads is as easy as trading an outright futures contract. Below is a 3-leg butterfly spread in Lean Hogs that we recently closed out in Traders Notebook : short one contract in June and in August, 2016, and long 2 contracts in July, 2016. The blue line on th...
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Bollinger Bands in a Nutshell

Markets move between low volatility trading range moves and high volatility trend moves. One of the best ways to see this taking place is with the Bollinger Bands. When a market makes an extremely narrow range move the Bollinger Bands will noticeably narrow together. When the bands narrow down it shows decreasing to low volatility condition on prices. Of course, a low volatility market forecasts a...
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Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.